Political Entrepreneurs

The Economic Engine of Political Change

On the publisher’s website, Madmen is described as a book that “offers up a simple, economic framework for understanding the systematic causes of political change.”

That description follows the language that Wayne and I use throughout the book. For example, in the Preface we say we “offer a framework to think about how ideas matter, when it is that political change happens, and why at other times the status quo endures.”

In brief, our framework (laid out in Chapter 5) pairs the structure of ideas, institutions, and incentives with the main types of people who bring about change: namely academic scribblers who originate ideas, intellectuals who translate and popularize those abstract ideas, and madmen in authority who appeal to the masses and ultimately are the ones who twist the knobs of change.

All fine and good. But why do we use the word framework? Whynot use theory or model instead? For direct inspiration on this point, we drew on Elinor Ostrom’s work, particularly how she uses the word framework in her 2009 Nobel address to describe the analytical structure that guided her empirical work.

While the terms frameworks, theories, and models are used interchangeably by many scholars, we use these concepts in a nested manner to range from the most general to the most precise set of assumptions made by a scholar. The IAD [Institutional Analysis and Development] framework is intended to contain the most general set of variables that an institutional analyst may want to use to examine a diversity of institutional settings including human interactions within markets, private firms, families, community organizations, legislatures, and government agencies. It provides a metatheoretical language to enable scholars to discuss any particular theory or to compare theories.

A specific theory is used by an analyst to specify which working parts of a framework are considered useful to explain diverse outcomes and how they relate to one another…. Models make precise assumptions about a limited number of variables in a theory that scholars use to examine the formal consequences of these specific assumptions about the motivation of actors and the structure of the situation they face. (pg. 414, emphases in original)

In the same manner, the framework in our Chapter 5 is intended to be a general platform on which specific theories and models of political change can be built, which in turn can be used to formulate and test specific hypotheses about individual instances of political change. For example, at what point can we expect marijuana prohibition to be repealed? Or what types of tax and budget reforms will emerge from the “fiscal cliff” crisis? Or which proposals for reforming vital organs have real political legs? And so on.

At the beginning of our project (i.e., in this first book) we consciously set out to build a highly general approach that could be used to understand virtually any episode of political change. As our project continues, we’ll be writing studies on various episodes of political change, and along the way we’ll rely on our framework to formulate and test specific theories and hypotheses. So there’s much more to come…

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.189, ch.7)

The most successful entrepreneurs know what they do well, they know the market and the opportunities within it, and they choose those activities that create the most value. This is true in economic as well as political markets.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.178, ch.7)

[W]hen the right elements come together at the right time and place and overwhelm the status quo, it is because special people make it happen. We call them political entrepreneurs.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.176. ch.7)

While we started this book with Danny Biasone saving basketball, we end it with Norman Borlaug saving a billion lives. These stories are not that different. Both faced vested interests, which were reinforced by popular beliefs that things should be a certain way—that is, until a better idea came along.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.174, ch.6)

Because there was a general belief that homeownership was a good thing, politicians found the public with open arms.... Everybody was winning—except Alfred Marshall, whose supply and demand curves were difficult to see through the haze of excitement at the time, and except Friedrich Hayek, whose competition as a discovery procedure was befuddled... In short, once politicians started getting credit for homeownership rates, the housing market was doomed.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.166, ch.6)

Everyone responded rationally to the incentives before them. In short, the rules that guided homeownership changed over time, which in turn changed the incentives of these actors. And bad things happened.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.153, ch.6)

They understood the economics. The ideas had already won in ... the regulatory agency itself. All that remained to be overcome were some vested interests and a handful of madmen in authority.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.146, ch.6)

If the idea for auctions of spectrum use rights had been part of the public debate since at least 1959, why didn’t the relevant institutions change sooner? What interests stood in the way?

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.121, ch.5)

When an academic scribbler comes up with a new idea, it has to resonate well with widely shared beliefs, which in turn must overcome the vested interests at the table. Many forces come together to explain political change, even though it may seem like coincidence of time and place.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.120, ch.5)

It’s the rules of the political game that deserve our focus, not politicians’ personalities or party affiliations.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.119, ch.5)

In short, ideas are a type of higher-order capital in society. Like a society that is poor in capital and therefore produces little consumer value, a society that is poor in ideas and institutions will have bad incentives and therefore few of the desirable outcomes that people want.